Chesapeake looks to sell Texas, New Mexico fields for $12B

Chesapeake Energy Corp. (NYSE: CHK) is preparing to sell its oil and gas fields in Texas and New Mexico worth as much as $12 billion.

Bloomberg reports that Chesapeake, the second-largest U.S. natural-gas producer is facing a cash squeeze and continued pressure from falling gas prices.

Oklahoma-based Chesapeake and rival exploration and production companies such as Houston-based ConocoPhillips (NYSE: COP) have been cutting back on gas production and focusing on more lucrative oil exploration after a glut of supplies have pushed prices down.

The company is looking to unload gas fields in the Permian Basin region, and said it would also receive about $2 billion in the next 60 days from the sale of advanced output from Texas and Oklahoma.

Chesapeake's Barnett Shale operations are headquartered in Fort Worth. Julie Wilson, Chesapeake’s vice president of urban development, said Monday's announcement doesn't apply to Chesapeake's Barnett operations and the company has no plans to sell assets in the Barnett.

The company is looking at a $3.5 billion gap this year between drilling costs and cash flow, Bloomberg reports, according to analysts Raymond James & Associates Inc.